BUSINESS NEWS
HEADLINES [click on headline to view story]: 

Khon Kaen local product sales hit the roof

Thailand needs to maintain export base in Asia, says BOT chief

Bright prospects for Thailand’s new online library business

US firms to increase investment in Thailand

Thailand’s five percent growth means jobless rate lower

Anti-Thai riots adversely affect trade and investment, says TFRC

EU eases Thai shrimp inspection but sticks to 100% inspections on Thai chickens

Local banks may buy back debt early

Final decision on deposit insurance rests with Finance Ministry

Finance Ministry hints of lifting foreign stock ceiling

Foreign investors skeptical about Thai growth figures

Khon Kaen local product sales hit the roof

Local products from the ‘One Village, One Product’ scheme of the northeastern province of Khon Khaen have been tremendously successful since its inception. The Khon Kaen One Village, One Product project developed its products by using local wisdom and applied an intensive marketing campaign such as organizing product showcases in exhibitions and festivals nationwide.

Khon Kaen’s commodities are becoming well known and accepted by domestic and international consumers especially silk, naturally dyed cotton cloth, and instant herbal tea.

Local product sales amounted to 271 million baht in October 2002. It is expected that the number will surpass 300 million at the end of this year. The APEC summit scheduled to be held in Khon Kaen in mid-2003 will help promote Khon Khan’s local products at the international level.

Chanchai Kosirinon, Chonnabot District Chief in Khon Kaen said silk had topped the highest sales among all goods from the One Village One Product program. (TNA)


Thailand needs to maintain export base in Asia, says BOT chief

Bank of Thailand’s Governor M.R. Pridiyathorn Devakula sees the need for the country to diligently maintain its export base in Asia given the uncertainty over the external situation.

Delivering a key-note speech at a recent meeting of the Thai-American and Thai-Canadian Chambers of Commerce, the BOT governor said he believes the economy will continue to grow as a result of more income earned by farmers from higher prices of farm products in the world market. He added that the budget deficit run by the government will also contribute to the continued growth of local consumption and investment.

M.R Pridiyathorn stated, “Although the budget deficit set for this year is less than that of last year, the government is using the funds to stimulate the economy at the grass-root level. Such actions will manage to maintain the economic growth. Prices of farm products in the world market are higher and the demand for vehicle tyres from the auto industry increases. This contributes to the Thai economic growth. Also, it is projected inflation rates will stay around 1.1.2%, which should boost investment for consumption.”

It was conceded that the country’s export will probably grow at a slower pace this year in the wake of the global economic slowdown. However, this year’s export is being marketed to expand in other destinations in Asia, excluding Japan. The demand for goods purchase has increased in export destinations in Asia, especially those to China which saw a rise of 10 % last year. (TNA)


Bright prospects for Thailand’s new online library business

The first-ever online library service of Thailand is receiving a good response from bookworms as the membership soared in its first three months of operation.

The library online service is located at www.thailib.com

Jentipong Phumchan, the library‘s web master said everyone could borrow books via the Internet after registering online to the web-site as a member.

“My fondness for reading inspired me to have my own library and decided to run the library business later,” he said.

Books of the online library are generally categorized the same as ordinary libraries. Clients can select their favorite items and submit their order on the computer. The requested books will be immediately delivered to the customers by postal service.

“More than 100 members have already registered with the web-site and the number of customers is likely to increase steadily. I don’t expect to earn a huge profit from my business but my intention is to create the reading community online,” Jantipong said. (TNA)


US firms to increase investment in Thailand

Board of Investment (BOI) secretary-general Sompong Vanapha said he was encouraged by the success of the 9-day road show held in the USA. Several American investors have indicated they intend to increase their investments in Thailand. The interested American firms include AMD, the world’s largest semi-conductor, and Western Digital, the world’s third-largest hard discs drive producer. Both have manufacturing plants in Thailand.

“The BOI was approached by about a hundred American investors regarding its current investment promotion policy on investment channels and industries that could ensure attractive investment yields,” said Sompong.

He added that there was also a strong interest in the electronics and tourism sectors.

The BOI delegation met with high-level executives of four global electronics giants and visited their manufacturing plants. American firms operating in research engineer, electricity production, and telecommunications enquired about BOI policy on tax incentives for setting up offices in Thailand.

The BOI delegates also met with high-level management of the Multilateral Investment Guarantee Agency (MIGA), a unit of the World Bank, to seek more efficient measures of cooperation when courting foreign investors. (TNA)


Thailand’s five percent growth means jobless rate lower

A recent report put out by the Federation of Thai Industries indicated renewed confidence in the local economy, new record-low unemployment, higher tax collection and improved industrial output.

The Thai industries sentiment index rose to 106.2 from 105.5 in November of 2002 based on responses from 420 factories. A reading of 50 or above on the index means that business executives are more optimistic than negative.

One serious concern for manufacturers is the possibility of higher oil prices which would edge up if war breaks out between the US and Iraq. The federation vice chairman Santi Vilassakdanont said that higher oil prices could push up fuel costs and dilute confidence.

Thailand’s unemployment rate dropped to a record low of 1.4 percent in December 2002 according to figures released from the National Statistics Office. Increased demand in housing, consumer spending and low interest rates have contributed to rising employment. A year ago, the jobless rate was 1.77 percent.

The actual number of jobless registered fell to 490,000 in December 2002 from 610,000 a year before. The number of workers employed in factories rose by 560,000 to 5.24 million, in construction by 250,000 to 1.47 million and in agriculture by 20,000 to 16.6 million. (TNA)


Anti-Thai riots adversely affect trade and investment, says TFRC

The anti-Thai riots which recently rampaged in Cambodia will have an adverse impact on trade, investment and tourism cooperation between the two neighboring countries, according to Thai Farmers Research Center (TFRC).

Thailand’s leading think tank said the incident has damaged the atmosphere of bilateral trade, which has an annual value of 40,000 billion baht. Thai traders are uncertain about the turmoil in the country and want to wait and see until the situation returns to normal.

Key Thai exports to Cambodia include packaged oil valued at US$61 million while imports from the country are ore and metallic residue valued at $2.2 million.

TFRC said political instability had periodically undermined foreign investment in Cambodia in the past several years. Most investor dared not make huge investment in the country.

In its report, TFRC said, “As the Thai economy begins to recover Thai businessmen want to invest overseas to expand their business. It is predicted they will shy away from investing in Cambodia and turn to investment spots where there is more safety and security.”

TFRC added Thailand was likely to lose the Cambodian tourist market, which is the third largest in Indochina after Vietnam and Laos, as a result of the tension in bilateral relations. The number of Cambodian arrivals has increased in the past five years, earning Thailand tourism revenue of more than one billion baht. (TNA)


EU eases Thai shrimp inspection but sticks to 100% inspections on Thai chickens

Thailand’s prawn farmers are celebrating after news recently emerged that the European Union will no longer insist on stringent inspection procedures for Thai prawns. But the Ministry of Agriculture warned that Thailand could still retaliate unless the EU eased similar restrictions on Thai chickens.

Deputy Agriculture Minister Newin Chidchob said that the EU had announced that it would cease its stringent inspections of Thai prawns, on the condition that the Thai Department of Fisheries carried out its own strict inspections prior to the prawns being exported and reported to the EU each month.

While the EU’s latest move marks a victory for prawn farmers, who for the past year have been working closely with state agencies to ensure that their products meet EU regulations, for many it has come too late. It is estimated that Thailand lost 15 percent of its export earnings on prawns to the EU; equivalent to 20 billion baht, as a result of the EU’s stringent inspection process last year.

But Newin had bad news for Thai chicken farmers - the EU will continue to insist on 100 percent inspections.

The deputy minister said he would send officials from the Department of Livestock Development to reiterate to the EU that Thai chicken meat did not contain nitrofuren, but warned that the EU would have to face the consequences if it continued to play ‘political games’ with Thailand’s chicken exports.

Thailand is estimated to have lost 10 billion baht last year as a result of EU regulations concerning its exports of chicken meat.

Accusing the EU of protectionism, Newin warned that Thailand would call on the World Food Standards Office to put pressure on the EU, and would alert the World Trade Organization to the issue. Thailand may also consider refusing to increase its quota of powdered milk imports from the EU, and not reduce taxes on EU powdered milk until the EU backed down.

Thailand hopes to send agricultural officials to ports in Europe, the US and Japan to coordinate in the inspection process of livestock imports from Thailand.

The Ministry of Agriculture and Cooperatives has requested state funding to provide Thailand’s chicken farmers with hand-held inspection equipment in order to make the inspection process easier. (TNA)


Local banks may buy back debt early

Local banks are getting set to buy back US$3.1 billion in hybrid debt issued after the 1997-98 Asian economic meltdown in order to strengthen the banks in the long term. The hybrid paper, a mixture of bonds and preferred shares with a total face value of 132 billion baht (US$3.10 billion), was sold with 7 years’ duration but with a clause that allowed the banks to exercise call options from 2004.

The banks included are Bangkok Bank, Thai Farmers Bank, Bank of Ayuthaya, Thai Military Bank and DBS Thai Danu Bank, all of which sold the debt in 1999 to raise money for bad loan provisions after thousands of borrowers defaulted.

Because the interest on the debt averages a very expensive 11.5 percent per year, the banks now want to exercise their right redeem the debt early.

Analysts expect the banks to raise money for the refinancing over the 12 months and buy back the debt in early 2004. “Between January and June 2004, five banks are likely to refinance their costly hybrid capital that would enhance margins and earnings by 44 basis-points and 57 percent respectively, “Phillip Finch at UBS Warburg said in a research note.

Thai Military Bank recently stated said it planned a rights issue in the first half of the year for hybrid debt refinancing, while Bank of Ayuthaya said it would issue bonds to avoid share dilution. Other banks have yet to announce their plans.

Bangkok Bank has said it wants to redeem its hybrid debt but had not yet decided how to raise the funds. Analysts said Bangkok Bank could improve its earnings per share by three baht fully diluted if it chose to redeem the debt.

Bangkok Bank is forecast to make a net profit of 9 billion baht in 2003 and 11.74 billion baht in 2004, according to Multex Global Estimates. The bank made 6.27 billion baht profit in 2002. (TNA)


Final decision on deposit insurance rests with Finance Ministry

Bank of Thailand (BOT) Governor M.R. Pridiyathorn Devakula has restated that the final decision on the establishment of the Deposit Insurance Institute rests with the Finance Ministry.

He said the BOT worked out the structure and approach to setting up the institute and submitted it to the ministry for consideration last year.

The ministry has already conducted a pubic hearing on the matter and is waiting for suitable timing to issue an act on establishing the institute. The ministry wants to be certain country’s economic growth is sustainable.

The BOT governor said, “We have already done what we were assigned to do in terms of the framework of the institute. Now it is the duty of the Ministry of Finance to consider and propose it to the cabinet and the parliament for the enactment.”

The BOT chief conceded the institute should be established only when the economy has picked up. Although the economy has already begun to improve many other factors must be taken into consideration, he added. (TNA)


Finance Ministry hints of lifting foreign stock ceiling

Finance Minister Somkid Jatusripitak recently gave a clear indication that he personally supports the lifting of the ceiling currently barring foreigners from holding more than a certain proportion of stocks in Thai firms, acknowledging that the current regulations pose a barrier for potential shareholders.

Somkid said that large scale companies across the world required diversity among their shareholders, and that he personally felt that Thailand’s current ceiling should be lifted.

He warned, however, that lifting the ceiling was something that would have to be done with caution, as lifting controls could run into legal difficulties, and recognized that the government could run up against accusations of selling the country to foreigners.

The finance minister however brushed off anticipated criticism of the move, saying that in today’s world of globalization, money circulated throughout the world, settling in places where investment proved the most attractive. (TNA)


Foreign investors skeptical about Thai growth figures

The president of the International Chamber of Commerce recently warned that foreigners are concerned that Thailand’s economic growth seems to be driven by domestic consumption and government debt and spending rather than by exports and revenue.

Kierti said the government has to attach more importance to the perceptions of foreign investors. Foreign investors were worried that Thailand’s economic growth was based on consumption and credit rather than on true growth indicators such as exports.

“Several groups of foreign investors constantly come to check out the basics of the Thai economy. Some of them are satisfied with the high economic growth rate, but several other groups have expressed doubts that Thailand’s economic expansion is being driven by government spending, consumption and debt”, he said.

The chamber of commerce president also urged the government to do everything in its power to prepare for the eventuality of a US-Iraq war in order to minimize impact on Thai businesses. (TNA)